A fixed-odds betting terminal (FOBT); the government is considering slashing the £100 maximum stake.
Photograph: David Levene for the Guardian

Ladbrokes is being investigated by the Gambling Commission over an allegation that staff watched a gambling addict take out payday loans to fund hundreds of pounds of bets on fixed-odds betting terminals (FOBTs).

And it prompted concern from a debt counselling service, which warned it is seeing an upsurge in gambling addicts taking out risky loans with little regard for the consequences.

‘He’s sweating and rubbing his nose. Within minutes, he’s lost £400 on the machines’

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Paul Jones, a 39-year-old recovering gambling addict, told the Guardian that he twice took out high-interest payday loans by telephone in front of Ladbrokes staff at a branch in Birmingham. He said they not only knew he was taking out the loans but even ran his debit card to see if the money had arrived in his account.

Jones has produced bank statements to back up his allegations, showing a sequence of transactions with Ladbrokes and payday loan companies.

“I borrowed the maximum I could, about £200, and lost that within 15 minutes,” he said. “I didn’t want to leave because I was sure the machine would pay out soon. All compulsive gamblers think that. So I got a payday loan and it was in my account within 15 minutes. I was checking with the staff to see whether it was in my account yet.”

“I lost all of that within 20 minutes so I got another loan, again checking with staff to see if it was in my account.”

The Gambling Commission’s code of practice for licensed betting operators demands that firms “put into effect policies and procedures for customer interaction where they have concerns that a customer’s behaviour may indicate problem gambling”.

But Jones said staff made no effort to intervene, instead looking on as he borrowed money before watching him feed it directly into Ladbrokes’ betting machines.

“Nobody said anything about whether or not I should be doing that,” he said. “It wasn’t encouraged but it certainly wasn’t discouraged. Thankfully once that second loan was gone my phone battery died and I couldn’t get another. I would have done. I’m a compulsive gambler and I don’t blame them for that but I blame them for making it worse.”

Jones said he had also taken payday loans while playing FOBTs in other well-known high street bookmakers, which cannot be named because he could not recall exact dates or provide bank statements to support the claims.

A Ladbrokes spokesperson said the bookmaker “has a clear commitment to helping our customers gamble in a safe and responsible manner, both in-shop and online. We are currently investigating the claims made in this case.”

The Gambling Commission’s executive director, Sarah Gardner, said: “We expect all operators to take their social responsibility duties seriously and to step in when where they have concerns that a customer’s behaviour may indicate problem gambling.”

Referring to a £7.8m penalty imposed against online gambling firm 888 last month for failings in dealing with problem gamblers, she added: “As our latest action against 888 shows – which included a £7.8m penalty package – we take any operator failures to step in when they have concerns about customer behaviour very seriously.”

“This story is shocking but sadly it’s an all too familiar one,” said Labour’s deputy leader Tom Watson, who last week said Labour would force companies to pay a levy to fund addiction treatment.

“Bookmakers and gambling companies talk about responsible gambling but they allow vulnerable customers to spend money they can’t afford to lose online and in stores every single day.”

“We are continuing to see a surge in clients with gambling-related debts and sadly the vast majority have taken out payday loans,” she said. “This type of loan is worryingly appealing to a gambler. They’re a quick and easy way to access funds, maybe to chase recent losses, or get an impulsive bet on before a race or match starts.”

She warned this was leading to a “vicious circle of potentially devastating” debt. “We need the gambling industry to work much closer with us in support of this.”

The government is due to say in early November whether it intends to reduce maximum stakes on FOBTs, amid reports that they are unlikely to remain at £100. Some campaigners are calling for stakes to be cut to £2.

Jones said his parents eventually bailed him out of his debts and he has not gambled since March after attending Gamblers Anonymous sessions. He now supports calls by campaigners for a crackdown on FOBTs, because bookmakers are not doing enough to prevent problem gambling.